Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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Our Current Product Pipeline

*Based on management's current beliefs and expectations

IV intravenous. IVit intravitreal

Recent Clinical Developments

Phase 2 Trial of intravenous VCN-01 with nab-paclitaxel plus gemcitabine in patients with PDAC

On March 23, 2026, we announced a positive End-of-Phase 2 Meeting with the U.S. Food and Drug Administration (the "FDA") regarding the design of a Phase 3 trial of VCN-01 in Metastatic Pancreatic Ductal Adenocarcinoma ("PDAC").

The FDA provided general agreement with our proposed design for a Phase 3 clinical trial, which closely tracks the design of the successful VIRAGE Phase 2 trial. As announced in 2025, the VIRAGE trial met its primary endpoints, with metastatic PDAC patients receiving VCN-01 with SoC chemotherapy having improved overall survival (OS), progression free survival (PFS) and Duration of Response (DoR) compared to SoC chemotherapy alone. Greater improvements in OS and PFS were observed in patients who received two doses of VCN-01, leading us to plan the Phase 3 trial to include repeat dosing and an adaptive design aimed to optimize the trial's timelines and outcomes.

Consistent with scientific advice previously received from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency ("EMA"), the FDA advised that a potential biologics licensing application (BLA) for VCN-01 in metastatic PDAC could be supported by our proposed Phase 3 clinical trial (if successful) comprising a single, high-quality, randomized, double-blinded, study comparing VCN-01 plus gemcitabine/nab-paclitaxel SoC to gemcitabine/nab-paclitaxel SoC plus placebo. The FDA further agreed on the proposed dosing of VCN-01 and gemcitabine/nab-paclitaxel in repeated "macrocycles" (enabling more than 2 doses of VCN-01 to be administered in the Phase 3 trial), the proposed inclusion/exclusion criteria, the primary endpoint (overall survival), key secondary endpoints (including progression free survival), and the use of an adaptive design. The FDA also clarified statistical expectations regarding the proposed interim analyses and the quality of data required for potential sample size re-estimation or a demonstration of early efficacy.

On April 17, 2026, we announced the presentation of additional data from the VIRAGE Phase 2b Clinical Trial at American Association for Cancer Research (AACR) 2026 Annual Meeting. Tumor response, biomarker, and subgroup analyses from the VIRAGE Phase 2b clinical trial support a VCN-01 immune-mediated mode of action and demonstrate improved outcomes in VCN-01 treated patients across multiple subgroups, including patients with liver metastases were presented in a poster session by Dr. Manuel Hidalgo (NYU Langone Health Perlmutter Cancer Center, New York) in San Diego, California on April 20, 2026. This data also indicate that VCN-01 may enhance the antitumor effects of a range of coadministered pancreatic cancer therapies

On July 7, 2026, we announced that the Spanish Agency of Medicines and Medical Devices ("AEMPS") has authorized us to initiate the VIRAGE2 clinical trial, entitled "A Phase IIa, single-arm, single-center, open-label, proof-of-concept trial evaluating increased frequency dosing of zabilugene almadenorepvec (VCN-01) in combination with gemcitabine/nab-paclitaxel in patients with newly-diagnosed metastatic pancreatic cancer".

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The VIRAGE2 trial builds on the results of the 112-patient VIRAGE Phase 2b clinical trial evaluating VCN-01 in treatment naïve metastatic pancreatic ductal adenocarcinoma ("PDAC") patients receiving gemcitabine/nab-paclitaxel standard-of-care ("SoC") chemotherapy. In the VIRAGE trial, patients who received 2 doses of VCN-01 administered 3 months apart had significantly improved overall survival, progression free survival, and duration of response compared to patients treated with only one dose of VCN-01 or with SoC chemotherapy alone. As previously reported, both the EMA and the FDA recognized the improved survival in the group treated with 2 doses of VCN-01, and raised the possibility of more frequent repeated dosing of VCN-01 in combination with SoC chemotherapy to potentially improve clinical outcomes. The VIRAGE2 trial is designed to evaluate the safety and feasibility of administering at least 3 doses of VCN-01 given approximately 2 months apart in first-line metastatic PDAC patients in combination with SoC chemotherapy. The trial is intended to enroll six evaluable patients. On August 6, 2026, we announced the dosing of the first patient in the VIRAGE2 clinical trial. Two thirds of the target number of patients (4) have now been dosed in the VIRAGE2 trial and enrollment is expected to be completed in the fourth quarter of 2026 with initial pharmacodynamic and safety/tolerability data are anticipated by the third quarter of 2027. Results from this trial if successful, are expected to inform the VCN-01 dosing regimen for potential evaluation in a future pivotal Phase 3 clinical trial.

On September 30, 2026, we announced the publication of the results from the VIRAGE Phase 2b clinical trial of VCN-01 in metastatic pancreatic cancer in the premier journal Nature Medicine after rigorous peer review.

Phase 1 Trial of intravenous VCN-01 in Combination with Durvalumab in Subjects with Recurrent/ Metastatic SCCHN

On June 11, 2026, we announced that clinical and translational results from VCN-01's Phase 1 clinical trial in Head & Neck Squamous Cell Carcinoma ("HNSCC") were recently published on-line first in the journal Clinical Cancer Research.

The trial enrolled 20 adult patients with refractory or metastatic HNSCC, whose disease progressed despite previous therapies, including anti-PD-(L)1 immune checkpoint inhibitors. Six patients were enrolled into the concomitant Arm I LD of the study and were administered IV low dose VCN-01 (3.3E12 virus particles; LD) four hours prior to a fixed IV dose of durvalumab (1500 mg/q4w). Eight patients were enrolled into the sequential Arm II LD of the study, receiving low dose IV VCN-01 14 days prior to IV durvalumab administration. An additional six patients were entered into Arm II HD, receiving high dose IV VCN-01 (1.0E13 virus particles; HD) 14 days prior to IV durvalumab administration.

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The collective pharmacokinetic, tissue biopsy, radiomic and transcriptomic results support the proposed VCN-01 stroma-degrading and immune enhancing modes-of-action, resensitizing refractory tumors to durvalumab. As described in the publication, the prolonged OS observed with sequential delivery of VCN-01 followed by durvalumab suggests a potential clinical benefit in this heavily pretreated HNSCC population, These findings support further clinical development of VCN-01 with immune checkpoint inhibitors or other immune modulating anticancer therapies in HNSCC and potentially other cancer indications.

Intravitreal VCN-01 with topotecan for the treatment of patients with retinoblastoma

As previously reported, an investigator-sponsored Phase 1 study of VCN-01 in refractory retinoblastoma patients facing imminent enucleation was completed in the first half of 2024. Patients received two intravitreal administrations of VCN-01 on days 1 and 15. Based on the study results, it was concluded that VCN-01 was well tolerated and demonstrated an acceptable adverse event profile. Three patients presented a complete response. The safety and clinical outcomes of the Phase 1 study of VCN-01 were presented by the Principal Investigator (the "PI") of the study, Dr. Jaume Català-Mora, Pediatric Ophthalmologist, Sant Joan de Déu-Barcelona Children's Hospital, on February 3, 2026 at an invited session at the 41st Asia-Pacific Academy of Ophthalmology (APAO) Congress in Hong Kong (China).

We have been granted Rare Pediatric Drug Designation ("RPDD") for VCN-01 for the treatment of retinoblastoma. If a Biologics License Application (BLA) for VCN-01 for the treatment of retinoblastoma is approved by the FDA by September 30, 2029, we may be eligible to receive a Priority Review Voucher, which can be monetized. VCN-01 has also received orphan drug designation from the FDA and Orphan Medicinal Product Designation from the European Commission for the treatment of retinoblastoma.

In the first quarter of 2026, we made VCN-01 available to investigators at Hospital Sant Joan de Déu, Barcelona, for compassionate use in treating patients with retinoblastoma. Two patients have been treated with intravitreal VCN-01 in combination with intravitreal topotecan and patients are being followed by the treating physicians. We expect that outcomes from these compassionate use patients will provide valuable information on the feasibility and tolerability of this combination for use in a potential Phase 2/3 clinical trial.

As previously disclosed, preclinical data demonstrate potential antitumor synergy between VCN-01 and topoisomerase I inhibitors, such as topotecan. We believe that intravitreal coadministration of VCN-01 with topotecan may provide a new treatment option for children with retinoblastoma with vitreous seeds that are refractory/resistant to the use of current intravitreal chemotherapy, which remains an unmet medical need in patients with this ultra rare patient population. Extensive discussions with clinicians and key opinion leaders are on-going regarding the design of a Phase 2/3 clinical trial protocol for the VCN-01 + topotecan combination in this ultra rare patient population. A Type C meeting completed with the FDA on August 31, 2026 provided guidance on their current expectations for a clinical trial in this patient population, including proposed endpoints and statistical considerations. The FDA encouraged further discussion of the trial design with them, and additional interactions with the FDA are anticipated in Q1 2027.

We anticipate that the cost for the Phase 2/3 trial would be approximately $14 million (including patient expenses and chemistry, manufacturing and controls). If a protocol is ultimately submitted to, and agreed by, the FDA, we expect the first patient to be enrolled in April 2027, with rolling BLA submissions expected to be made in 2029 (if successful), targeting potential approval of the BLA prior to the current legislative deadline of September 30, 2029 to be eligible to receive a Priority Review Voucher. We have revised our estimate of the Phase 2/3 trial cost upward from our estimate of $9 million, as disclosed in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, based on an updated estimation for patient follow-up, and have adjusted the anticipated first-patient enrollment from January 2027 to April 2027.

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Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

There are accounting policies, each of which requires significant judgments and estimates on the part of management, that we believe are significant to the presentation of our consolidated financial statements. The most significant accounting estimates relate to valuation of IPR&D and contingent consideration.

IPR&D

IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects. IPR&D assets represent the fair value assigned to technologies that we acquire, which at the time of acquisition have not reached technological feasibility and have no alternative future use. IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred. During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if we become aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts. If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives at that point in time. If development is terminated or abandoned, we may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of carrying value of the IPR&D assets over fair value.

We conduct an impairment test of IPR&D on an annual basis as of October 1 of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce our fair value below our net equity value.

Contingent Consideration

Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future ("contingent consideration"). Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations. We estimate the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones. The milestone payments will be made upon the achievement of clinical and commercialization milestones. Subsequent to the date of acquisition, we reassess the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date. Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets.

Results of Operations

Three Months Ended September 30, 2026 and 2025

General and Administrative Expenses

General and administrative expenses decreased to $923,000 for the three months ended September 30, 2026, from $1.9 million for the three months ended September 30, 2025. This decrease of 51% primarily reflects a $841,000 decrease in the fair value of contingent consideration recognized in the three months ended September 30, 2026, compared to a $633,000 increase recognized in the same period in 2025, partially offset by a current year increase in legal fees. The charge related to stock-based compensation expense was $119,000 for the three months ended September 30, 2026, compared to $118,000 for the three months ended September 30, 2025.

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Research and Development Expenses

Research and development expenses decreased to $612,000 for the three months ended September 30, 2026, from approximately $2.6 million for the three months ended September 30, 2025. This decrease of 76% is primarily the result of lower direct expenses related to the completion of the VCN-01 Phase 2b PDAC clinical trial, lower direct expenses related to VCN-01 manufacturing activities, lower direct clinical trial expenses related to the paused Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients, lower expenses related to SYN-020, partially offset by expenses associated with the conduct of the VIRAGE2 Phase 2a study in metastatic PDAC patients evaluating more frequent VCN-01 dosing for a longer period. We anticipate research and development expense to decrease in the near future while we finish the recruitment of the VIRAGE2 Phase 2a clinical trial and we focus on regulatory interactions regarding a proposed pivotal clinical trial of VCN-01 in retinoblastoma, conduct exploratory VCN-01 manufacturing scale-up activities, and continue limited preclinical studies supporting VCN-01 and VCN-12, the first candidate from our VCN-X discovery program. The charge related to stock-based compensation expense was $25,000 for the three months ended September 30, 2026, compared to $110,000 for the three months ended September 30, 2025.

The following table sets forth our research and development expenses directly related to our product candidates for the three months ended September 30, 2026 and 2025. These direct expenses were external costs associated with preclinical studies and clinical trials. Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific product candidates.

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Other Income/Expense

Other income was $64,000 for the three months ended September 30, 2026, compared to other income of $79,000 for the three months ended September 30, 2025. Other income for the three months ended September 30, 2026 is comprised of interest income of $64,000. Other income for the three months ended September 30, 2025 is primarily comprised of interest income of $65,000 and an exchange gain of $14,000.

Net Loss

Our net loss for the three months ended September 30, 2026 was $1.5 million, or ($0.03) per basic and diluted common share, compared to $4.4 million, or ($0.45) per basic and diluted common share, for the three months ended September 30, 2025.

Nine Months Ended September 30, 2026 and 2025

General and Administrative Expenses

General and administrative expenses decreased to $5.0 million for the nine months ended September 30, 2026, from $14.5 million for the nine months ended September 30, 2025. This decrease of 65% primarily reflects a $1.0 million decrease in the fair value of contingent consideration recognized in the nine months ended September 30, 2026, compared with a $9.8 million increase recognized in the same period in 2025, partially offset by higher legal fees in 2026. The 2025 fair value increase was primarily attributable to the VIRAGE Phase 2b clinical trial of VCN-01 in PDAC achieving its primary survival and safety endpoints. The charge related to stock-based compensation expense was $340,000 for the nine months ended September 30, 2026, compared to $269,000 for the nine months ended September 30, 2025.

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Research and Development Expenses

Research and development expenses decreased to $2.2 million for the nine months ended September 30, 2026, from approximately $7.5 million for the nine months ended September 30, 2025. This decrease of 70% is primarily the result of lower direct clinical trial expenses related to our VIRAGE Phase 2b clinical trial of VCN-01 in PDAC, lower indirect cost related to decreased VCN-01 manufacturing costs, lower clinical trial expenses related to our paused Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and by lower patent expenses related to SYN-020. We anticipate research and development expense to decrease in the near future while we finish recruitment of the VIRAGE2 Phase 2a clinical trial and we focus on regulatory interactions regarding a proposed pivotal clinical trial of VCN-01 in retinoblastoma, conduct exploratory VCN-01 manufacturing scale-up activities, and continue limited preclinical studies supporting VCN-01 and VCN-12, the first candidate from our VCN-X discovery program. The charge related to stock-based compensation expense was $74,000 for the nine months ended September 30, 2026, compared to $232,000 related to stock-based compensation expense for the nine months ended September 30, 2025.

The following table sets forth our research and development expenses directly related to our product candidates for the nine months ended September 30, 2026 and 2025. These direct expenses were external costs associated with preclinical studies and clinical trials. Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific product candidates.

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Other Income/Expense

Other income was $227,000 for the nine months ended September 30, 2026 compared to other income of $245,000 for the nine months ended September 30, 2025. Other income for the nine months ended September 30, 2026 is primarily comprised of interest income of $226,000. Other income for the nine months ended September 30, 2025 is comprised of interest income of $215,000 and an exchange gain of $30,000.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $6.7 million, or ($0.15) per basic and diluted common share for the nine months ended September 30, 2026, compared to a net loss of approximately $21.7 million, or ($3.38) per basic and diluted common share for the nine months ended September 30, 2025.

Liquidity and Capital Resources

Historically, we have financed our operations primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner. During the year ended December 31, 2025, our primary sources of cash were the approximately $6.8 million in net proceeds received from sales of our Common Stock under the ATM Sales Agreement, approximately $3.9 million in net proceeds from the exercise of existing warrants by holders pursuant to a warrant inducement agreement, the $1.7 million received for the Research and Development rebate program, $1.4 million for the THERICEL project loan from the National Knowledge Transfer Program of the Spanish government's Ministry of Science and, in May 2025, we closed our May 2025 Offering of 6,818,180 shares of Common Stock (or pre-funded warrants in lieu thereof) in combination with accompanying common stock purchase warrants to purchase an aggregate of 6,818,180 shares of our Common Stock for gross proceeds of $7.5 million (net proceeds of $6.7 million, after deducting underwriting discounts and expenses). During the nine months ended September 30, 2026, the primary source of cash was from the $300,000 up-front payment received for the out-licensing agreement of SYN-020, $1.6 million received for the Research and Development rebate program and $2.3 million in net proceeds received from sales of our Common Stock under the ATM Sales Agreement.

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Pursuant to the terms of the license agreement we entered into with Rasayana Therapeutics, Inc. ("Rasayana") on February 18, 2026 (the "Rasayana License Agreement"), we granted Rasayana an exclusive worldwide license with the right to grant sublicenses to Research, Develop, Manufacture and Commercialize (as such terms are defined in the Rasayana License Agreement) any Product (as such term is defined in the Rasayana License Agreement), which includes SYN-020, an oral formulation of the recombinant intestinal alkaline phosphatase enzyme, comprising, containing, or covered by the Licensed IP (as such term is defined in the Rasayana License Agreement) and/or devised, developed, or produced using the Licensed IP, we received an upfront payment of $300,000 and we are entitled to receive from Rasayana: (i) development milestone payments of up to an aggregate of $16,000,000; (ii) sales milestone payments of up to an aggregate of $22,000,000 upon achievement of certain development and net sales milestones with respect to Products; and (iii) during the Royalty Term (as such term is defined in the Rasayana License Agreement), tiered royalties ranging from low to mid single digits on net sales of a Product. We will also be entitled to receive a certain percentage of any Sublicense Revenue (as such term is defined in the Rasayana License Agreement) received by Rasayana or its affiliates. However, we do not anticipate receiving any funds pursuant to the Rasayana License Agreement within the next twelve months.

On November 2, 2026, we announced the sale of our portfolio of antibiotic-degrading enzymes - including SYN-004 (ribaxamase), SYN-007 (reformulated ribaxamase), and SYN-006 (carbapenemase) - to Biossil Labs Inc. ("Biossil"), pursuant to the terms of an asset purchase and sale agreement, dated October 30, 2026, between us and Biossil (the "Biossil Purchase Agreement"). Under the terms of the Biossil Purchase Agreement, Biossil acquired all rights, title and interest in SYN-004 (ribaxamase), SYN-007 (reformulated ribaxamase), and SYN-006 (carbapenemase). We received a $350,000 upfront payment at closing and are eligible to receive up to an aggregate of $3 million in regulatory milestones, single-digit royalties on net product sales (subject to a cap of $250 million), and up to an aggregate of $88 million in milestones payable upon achievement of certain cumulative worldwide net sales thresholds. Biossil assumed all responsibility and costs for development and commercialization of the acquired product portfolio.

In connection with the Biossil Purchase Agreement, we also entered into an amendment (the "PREV Amendment") to the Asset Purchase Agreement, dated November 7, 2012, that we entered into with PREV ABR LLC ("PREV"), pursuant to which the amounts payable by us to PREV with respect to the assets that were transferred to Biossil were modified. Pursuant to the PREV Amendment, upon the closing of the sale of our portfolio of antibiotic-degrading enzymes to Biossil, we paid PREV $140,000. Thereafter, we will be required to pay PREV (i) fifty percent (50%) of regulatory milestone payments and sales milestone payments received by us or our affiliates pursuant to the Biossil Purchase Agreement, (ii) thirty-three and one-third percent (33⅓%) of royalty payments received by us or our affiliates thereunder and (iii) fifty percent (50%) of other consideration received by us or our affiliates in connection with the transferred assets, including license consideration payments, in each case subject to the terms and conditions of the PREV Amendment. Our payment obligations under these provisions are subject to an aggregate cap of $13.0 million. Amounts paid under the existing agreement prior to the date of the PREV Amendment do not count toward the $13.0 million cap. The PREV Amendment also provides that, if we or an affiliate transfers our right to receive consideration under the Biossil Purchase Agreement in specified circumstances, we will generally pay PREV fifty percent (50%) of the proceeds actually received from such transfer, subject to the $13.0 million cap.

As of September 30, 2026, we have a significant accumulated deficit, and with the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses and incurred negative cash flows since inception. We have incurred an accumulated deficit of $365.4 million as of September 30, 2026, and expect to continue to incur losses in the foreseeable future with the recognition of revenue being contingent on successful phase 3 clinical trials and requisite approvals by the FDA or foreign equivalents and the success of our licensee.

Our cash and cash equivalents totaled $8.5 million as of September 30, 2026, a decrease of $4.6 million from December 31, 2025. During the year ended December 31, 2025 and nine months ended September 30, 2026, the primary use of cash was for working capital requirements and operating activities, which resulted in a net loss of $23.7 million and $6.7 million for the year ended December 31, 2025 and the nine months ended September 30, 2026, respectively.

With our cash position of $7.5 million as of early November 2026, we believe we will be able to fund our operations into the first quarter of 2027; however, the current cash will only be sufficient to conduct certain limited clinical, regulatory, manufacturing, and preclinical activities as described herein and our cash runway could differ materially from our expectations based on various factors, many of which are out of our control. We continue to experience operating losses and face significant uncertainties related to our business model, market conditions, clinical trial outcomes, FDA review timelines and strategic initiatives. These factors raise substantial doubt about our ability to continue as a going concern beyond the next twelve months without additional capital or other strategic actions. Management has developed plans intended to mitigate these uncertainties, including pursuing strategic collaborations, securing additional financing, prioritizing key development programs and pursuing other strategic alternatives, that may include a business combination, merger or reverse merger. There can be no assurance that such actions will be sufficient to alleviate the going concern uncertainty.

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We are devoting substantial time and resources to the strategic review. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We have not set a definitive timeline for completion of this strategic review process, and our board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value.

Based on our current plans, we expect that our cash and cash equivalents will be sufficient to cover overhead costs, finish recruitment into our VIRAGE2 Phase 2a study evaluating more frequent VCN-01 dosing for a longer period, exploratory VCN-01 manufacturing scale-up activities, regulatory interactions regarding a proposed pivotal clinical trial of VCN-01 in retinoblastoma, and limited preclinical studies supporting VCN-01 and VCN-12, the first candidate from our VCN-X discovery program. We believe that the cash will also be sufficient to fund our committed obligations under the terms of the Share Purchase Agreement entered into in connection with the Acquisition (the "Purchase Agreement"), however, payment of the $5.0 million owed to Grifols Innovation and New Technologies Limited will significantly deplete our cash and cash equivalents, which could materially and adversely affect our liquidity and limit our ability to fund operations or meet other financial obligations. Our current cash will not be sufficient for additional trials of VCN-01 (other than the VIRAGE2 Phase 2a study evaluating more frequent VCN-01 dosing for a longer period), which are expected to require significant cash expenditures. Following the completion of our ongoing Phase 1 and Phase 2b clinical trials for VCN-01, and limited preclinical studies supporting VCN-01 and our discovery initiatives, we will need to obtain additional funds for future clinical trials. We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the aforementioned clinical programs. We do not have any committed sources of financing for future clinical trials at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If not available we will not commence such trials and we will not further advance key products, and maintain our planned operations. The amount of additional capital needed by us will also depend upon the costs to advance our VCN-01 clinical programs.

We are actively pursuing additional equity or debt financing opportunities, in the form of either a private placement or a public offering and have been engaged in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings as well as other strategic alternatives. Potential sources of financing that we are pursuing include strategic relationships, licensing arrangements, public or private sales of our equity or debt and other sources. Such additional financing opportunities might not be available to us when and if needed, on acceptable terms or at all. We may attempt to utilize the ATM Sales Agreement or seek to raise additional capital in other financing transactions, neither of which is guaranteed. We cannot assure that we will meet the requirements for use of the ATM Sales Agreement especially in light of the fact that we are currently limited by rules of the SEC as to the number of shares of Common Stock that we can sell pursuant to the ATM Sales Agreement due to the market value of our Common Stock held by non-affiliates. Even if we meet the requirements for use of the ATM Sales Agreement, there can be no assurance that we will be able to raise funds through the sale of shares of Common Stock through the ATM Sales Agreement. Additionally, we may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. If we are not able to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished, and we may be forced to cease certain development activities. More specifically, the completion of any later stage clinical trial will require significant financing or a significant partnership.

If we raise funds by selling additional shares of Common Stock or other securities convertible into Common Stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain funding for future clinical trials when needed, we will not be able to carry out our business plan and we will be forced to delay the initiation of future clinical trials until such time as we obtain adequate financing or we are able to secure a strategic collaboration and may need to abandon some of our development programs, cease operations, sell or otherwise liquidate our assets or reorganize the Company, or complete a combination of the foregoing.

We are evaluating and pursuing a variety of strategic alternatives focused on maximizing stockholder value, including, but not limited to, an acquisition, merger, reverse merger, other business combination, sales of assets or other strategic transactions. There can be no assurance that our pursuit of strategic alternatives will lead to any transaction or, if a transaction is completed, that it will create value for our stockholders. The terms of any transaction may be less favorable than expected. A transaction, such as a reverse merger or business combination, could substantially dilute our current stockholders or place their investment in a business that is significantly different from our current one. Completing a transaction may also depend on conditions we do not control, such as stockholder approval, regulatory approvals and the counterparty's own financing. If the review does not produce a transaction, or if a proposed transaction is not completed, we may have to pursue other alternatives on less favorable terms. These could include a dissolution and liquidation of the Company, in which case the amount, if any, distributed to stockholders could be significantly lower than the current market price of our common stock.

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Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue. Our notes to the consolidated financial statements included in this Quarterly Report contain an explanatory paragraph referring to our recurring and continuing losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. We cannot provide any assurance that we will be able to obtain the required funding to achieve our current business plan, obtain the required regulatory approvals for our product candidates or complete additional corporate partnering or acquisition transactions in order to commercialize such product candidates once regulatory approval is received. If we fail to obtain additional funding for our clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, we will not be able to execute our business plan as planned and will be forced to cease certain development activities (including initiation of planned clinical trials) until funding is received or we are able to secure a strategic collaboration and may need to abandon some of our development programs, cease operations, sell or otherwise liquidate our assets or reorganize the Company, engage in a strategic alternative or complete a combination of the foregoing. There can be no assurance that we will be able to successfully effect any of the foregoing.

Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):

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Cash Used in Operating Activities

Net cash used in operating activities was $8.4 million and $13.8 million during the nine months ended September 30, 2026 and 2025, respectively, which was primarily due to the use of funds in our operations related to the development of VCN-01. Cash used in operating activities for the nine months ended September 30, 2026 decreased compared to the same period in 2025 due primarily to prior year contingent consideration adjustment, and lower research and development expenses due to completion of trials offset by higher legal and investor relation costs, which led to a decrease in net loss.

Cash Used in Investing Activities

Cash used in investing activities during the nine months ended September 30, 2026 and 2025 was $8,000 and $35,000, respectively, for equipment purchases.

Cash Provided by Financing Activities

Cash provided by financing activities during the nine months ended September 30, 2026 included at the market offering proceeds of $2.3 million from sales of 10,204,319 shares of our Common Stock under the ATM Sales Agreement, and $1.6 million received for the research and development tax credit offset by payments of loans payable of $59,000. Cash provided by financing activities during the nine months ended September 30, 2025 included $1.8 million received for the research and development tax credit, $1.5 million in loan proceeds from the THERICEL project loan, $6.7 million in net proceeds from the sale of Common Stock and at the market offering proceeds of $279,000 from sales of 706,810 shares of our Common Stock pursuant to the ATM Sales Agreement offset by payments of loans in the amount of $69,000 and payment of contingent consideration of $500,000.

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Off-Balance Sheet Arrangements

During the nine months ended September 30, 2026, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

Leases

At the inception of a contract we determine if the arrangement is, or contains, a lease. Right of use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

We have made certain accounting policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases. As of September 30, 2026, we did not have any material finance leases.